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Seems like big business has figured out that they can do better under current poor economic conditions, perhaps one reason they're not pushing for government stimulus programs. In a bad economy, wages are kept down and access to capital by potential competitors is limited. Less competition means less need to spend as much on marketing or to cut prices. What do you think?
Feel free to nominate me for next year's Nobel in Economics.
Seems like some folks really have no clue what determines the health of an economy. When firms decide that there is too much uncertainity due to hostile government actions to do other than horde their resources and investors "reward" this behavior with relatively high share prices (all be it with devalued currency) that is not "good for big business".
Healthy economic conditions include predictable government policies. Business leaders that hear themselves being demonized, their tax rates being raised and their very value to the country being compared more to a plague than an asset rightly will decide to "take their ball and stay home".
Employmnet happens when firms need the services of a skilled workforce to make / deliver the goods and services needed. Unemploymnet happens when the threat of paying a workforce exceeds the potential for firms to profit.
Seems like some folks really have no clue what determines the health of an economy. When firms decide that there is too much uncertainity due to hostile government actions to do other than horde their resources and investors "reward" this behavior with relatively high share prices (all be it with devalued currency) that is not "good for big business".
So you're agreeing with my premise. High share price is rightly perceived as a good thing by management. If anything, we're now living through a period of more economic certainty than we were 5 years ago. Perhaps more certainly undesirable, but more certain just the same.
High share price is rightly perceived as a good thing by management.
Not just by management though.
The rub is that however devalued those dollars are...
we're all playing the same game using the same chips
Quote:
Perhaps more certainly undesirable, but more certain just the same.
There has always been uncertainty.
It's rather like that old joke about the men being chased by a bear...
Man #1 to the Man #2: Why running so fast? We'll never beat him
Man #2 to the Man #1: I don't have to beat him; I only have to beat you.
Short-term, OP, it helps them as they proved they could take out costs (heads) faster than rvenue fell, but execs are rewarded over the change in profitability vs prior year, so oops, now prior year profits were high, and they are worried as the low hanging fruit (8 million fired in 2008-2010) are gone, and there is no more quick fix for this year.
Touched upon by the second poster, who used politically charged arguments (government regulation is responsible, business doesn't know what the government will 'do,' or perhaps more aptly doesn't like what the government is doing), I think the political lens is the most important here. Improved economy under Obama is less profitable than improved economy under your standard republican and much less profitable than what happens if the Tea party controls two branches of government. The objective of most business that has gotten "big" from wherever it started out is increased profitability.
Isn't the motivation for a poor economy, in the eyes of "big" business, mostly that they can subsequently blame other institutions (like the government) for poor economic growth while "waiting it out" for a more favorable climate that doesn't include so much of that overly discussed term, regulation. Most large businesses have more longevity than the 4 or 8 years of a presidential term and perhaps they are 'hedging' until the "regulatory environment" feels right. Why invest now when you could invest later and make more? The plight of the layman doesn't factor in.
From my own perspective as a potential small-business owner, commercial real-estate mortgages are scarce as big banks don't want to deal with them and small banks follow the behaviors of the big ones. Yet this issue has little to do with the regulation imposed after the housing bubble which rarely involved commercial real estate. More small business loans, even with a high failure rate, would improve the jobs outlook and pay off the mortgage institutions given the right kinds of collateral in the deals. Yet even with cosigners or good collateral, certain mortgages aren't touched. Yet there has been no "regulation" (to my knowledge) to overly protect the debtor in this realm. "Big" business doesn't want to get involved, doesn't want to 'risk' anything. Care to elaborate why to a novice like me?
erw32, Big buz will not invest here anymore..again..no matter who wins, as the US is a mature market, while Asia is a growth market. When they spend any money REPLACING spent equipment, it will NOT grow jobs. They will opt for more robots. We need to get out of the mindset that this is a down cycle. It is the new "normal".
There is nothing profitable about investing in a mature market? We still provide service in the US like tourism, legal/consultation, and we still make things like software and agricultural products. Maybe I don't fully understand what you mean by big business, as I think of investors as primarily lenders or entrepreneurial organizations not companies that are building infrastructure. Certainly our population isn't growing and we don't have an emerging middle class like China might. I guess decadence and decline are the same phase for all great civilizations.
I do appreciate the explanation of the mortgage question though.
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